In organizations, such as companies or government agencies, multiple potential projects may be proposed for evaluation and/or executions. Often times the resources available for evaluation and/or execution of projects by a particular organization may be limited such that all of the proposed projects for evaluation and/or execution may not be resourced or funded. Further, at times, the resources available for funding projects within a particular organization may change over time, such as due to changes in the organization's budget, and the organization may have to dynamically determine how to execute projects in light of the imposed changes in resources. This may entail the organization adding or subtracting projects that it evaluates and/or executes responsive to changes in the organization's budget.
Organizations may implement a variety of mechanisms to select projects to evaluate and/or execute from a larger set of proposed projects in a resource and/or funding constrained environment. Often times, the stake holders associated with each of the projects, such as the project managers and/or project team members, may discuss various aspects of the proposed projects, such as expected benefits, risks associated with the project, cost estimates, time to completion, importance and/or linkages to other projects, other intangibles, or the like. The decisions of which projects to fund or priorities associated with the funding of competing projects may be swayed by influential stake holders or by other considerations that may not fully optimize the expected value or expected regret resulting from the selection from the competing projects.
Portfolio selection and optimization methods generally assume the same or similar levels of confidence in the information about the costs, benefits, and risks of potential candidate projects under consideration for funding. However, in reality, the level of confidence in the information associated with candidate projects, understanding of potential program alternatives, and proposed new development projects may vary relatively significantly from project to project. Some projects may be well understood, with relatively high confidence in their cost estimates, development risks, and benefits assessments and/or estimates. On the other hand, competing projects that involve new concepts or technologies, which may in fact, in some cases, have significant advantages over current or more established (and better understood) approaches yet may have relatively less confidence in the projections and/or estimations of information associated therewith. Imbalance in the levels of confidence among different projects competing for funding may result in regrets that could have been avoided if due diligence resources had been more optimally allocated, to increase the confidence in promising but less well understood candidates projects. Often due diligence resources are spent refining already well established candidates that are either almost certain to be selected for funding or almost certain not to be selected because their selection would violate a selection constraint.